Here are Morgan Stanley's top internet and tech stock picks for 2020

Published Tue, Jan 21 202010:42 AM ESTUpdated Tue, Jan 21 20204:01 PM EST

Ride hailing company Uber can rally 60% this year, according to Morgan Stanley. The firm put out its top picks in the internet and tech space for 2020 and named Uber its top pick for the new year. "The 2-player US rideshare market continues to be more profit focused and we expect the decline in available private funding for cash-burning competitors (post WeWork) to make the non-US markets more rational," Morgan Stanley equity analyst Brian Nowak said in a note to clients Tuesday. Shares of Uber are down more than 20% since its initial public offering in May 2019. Investors pivoted away from unprofitable unicorn IPOs last year as paths to profitability become less clear. However, Nowak said there is a long runway for ride sharing in the U.S. and abroad, and Uber's profitability is improving in the rides business and with Uber Eats, its food delivery service Plus, Uber trades 10% below Morgan Stanley's valuation for ridesharing alone, "which speaks to the optionality as we see ~60% upside to our $55 price target," said Nowak. Uber closed at $35.57 per share on Friday. Morgan Stanley also picked Facebook and Google-parent Alphabet as its top-picks for online advertising in 2020. "For FB, we remain bullish on the company's ability to excel at broad-based engagement and innovative monetization," said Nowak. The firm expects Instagram stories to grow 150% year-over-year and generate about $1.7 billion in revenue for Facebook. "For GOOGL, we see the potential for Google Maps, Discover Feed, and new eCommerce products to add as much as $5bn to '20 Websites revenue," said Nowak. In addition to Uber, Facebook and Alphabet, Morgan Stanley likes Amazon , Snap and eBay in 2020. For small-to-mid sized companies, Morgan Stanley is watching Chewy , Grubhub and Etsy , among others. "Within SMID-cap e-Commerce, we continue to prefer companies with more sustainable competitive moats vs AMZN," said Nowak. Industries that are more "browsing-driven" than "search driven" are the best insulated, Nowak added. Shares of Uber popped more than 7% on Tuesday. — with reporting for CNBC's Michael Bloom.

Dara Khosrowshahi, chief executive officer of Uber Technologies speaks on a webcast during the company's initial public offering on the floor of the New York Stock Exchange, May 10, 2019.

Michael Nagle | Bloomberg | Getty Images

Ride hailing company Uber can rally 60% this year, according to Morgan Stanley.

The firm put out its top picks in the internet and tech space for 2020 and named Uber its top pick for the new year.

"The 2-player US rideshare market continues to be more profit focused and we expect the decline in available private funding for cash-burning competitors (post WeWork) to make the non-US markets more rational," Morgan Stanley equity analyst Brian Nowak said in a note to clients Tuesday.